Could the EU cope with another big economic crisis?

The financial markets have been on a roller coaster ride recently. After a long period of record-breaking highs, assets (including notoriously volatile cryptocurrencies such as Bitcoin) have seen dramatic falls. Analysts believe we are seeing a “correction” (as opposed to a crash) as interest rates are slowly increasing and investors look at robust growth internationally and start factoring in the possibility of rising inflation. Nevertheless, it’s focused minds on the overall health of the global economy. Our readers have certainly been busy sending us in questions and comments on this topic (amongst others) as part of our recent #AskDraghi initiative, organised in collaboration with the European Central Bank, the European institution in charge of keeping prices stable in the euro area. For example, Christiaan asked us if Europe is in a better place today than it was when the crisis hit a decade ago. Has the EU reformed enough to cope with another big economic shock?

Who better to respond to Christiaan than the President of the European Central Bank himself, Mario Draghi? In 2017, Mr Draghi was ranked by Forbes magazine as the 11th most-powerful person in the world. He has been credited with saving the euro by speaking three simple words: the ECB would do “whatever it takes” to protect the Single Currency. To put it bluntly, it’s worth listening to what he has to say. And, for the first time, Mr Draghi has answered questions online. So, what would he say to Christiaan?

Amidst a sea of volatility, one of the most turbulent assets has been Bitcoin (alongside other cryptocurrencies). Our next question was sent in via Twitter by Italo, asking for investment advice: “If you were a young university student like me, would you buy Bitcoin?”

What would Mario Draghi say to Italo? Should we all rush out and invest in cryptocurrencies?

Next up, we had another question via Twitter on the hot topic of cryptocurrencies, this one from Victoria. She’s apparently less interested in Bitcoin itself, but rather the underlying “blockchain” technology that Bitcoin is built upon. Her question: “How can blockchain technology support the economy?”

Curious to know more about the volatility of cryptocurrencies and Bitcoin? We’ve put together some facts and figures in the infographic below (click for a bigger version).

Our next question came from Ismail, who asked when we can finally say that Europe has shaken off the long shadow of the crisis and the decade of austerity: “When will Europe fully recover from its recession?”

Finally, we had a question sent in from Jan, asking about the future of the European economy and how it will be impacted by the new technologies we are already starting to see shake up the labour market: “How would the ECB respond if AI and automation caused massive youth unemployment?”

Want to hear more from other European leaders and experts? Check out our other “Ask” series elsewhere on Debating Europe. Recently, we’ve been running just such a series with the European Ombusdsman, Emily O’Reilly. Prior to that, we co-hosted a live #AskJuncker event with the President of the European Commission, Jean-Claude Juncker (and, in fact, we did the same thing with Juncker back in 2016). Before that, we co-hosted something very similar with Juncker’s predecessor, José Manuel Barroso. See what they had to say!

Could the EU cope with another big economic crisis?

Of course not, the whole point of the Euro was to lock Nations under the control of the EU dictatorship, it had nothing to do with monetary policy as it perfectly evident from the disaster it has been for most people in the Eurozone.

@Renato Which part of the word ‘Debate’ do you not understand comrade ?

Paul XFebruary 13th, 2018

@ Renato

I can only assume you weren’t around at the time but when the Euro was being introduced, anyone with an ounce of common sense knew that to have a successful function fiscal union you must also have full political union, yet despite all the advice saying this the EU carried on regardless…now why do you think that was?…

…..again the answer should be obvious to anyone, create a common currency which was clearly destined to have problems, then use this as the lever to demand increased political union as the solution….a cynical means to an end for which some countries in Europe are suffering the concequences

James McManamaFebruary 13th, 2018

@Paul X

I think you’re looking at the pre-euro economy through rose-tinted spectacles. The deutsche mark was overvalued, and the franc, lira, and peseta all experienced severe volatility. Price stability was one of the reasons so many countries happily signed up to the single currency (and, by and large, that’s what Europe has experienced with the euro).

See here, for example:

“… exchange rate volatility and depreciations [before Italy joined the euro] do not appear to have benefited employment in Italy. By contrast, it is in periods of stable exchange rates that the Italian economy moved towards reaching its potential, which also brought benefits in employment.”

A good analogy I read about the Euro is that each countries economy is like a car on a motorway. Each driver can speed up or slow down as they see fit. Now chain all the cars together in a single train and see what happens if one needs to brake

@Joe How can the ‘United states of Europe’ live long when it does not and never will exist ?, apart from in your head obviously. Is it next to Narnia or Neverland ? Clearly you are suffering from a delusional episode.

@Joe ,Germany is forcing other Eu countries to take in , so asylum seekers and, threatening to stop Eu funding and and other sanctions, if they don’t take them in. What would you call that? The so called Eu is a dictatorship

Did you know that the US banks and Soros have given millions and millions to the UK to stay in the EU? JPMorgan, Goldman Sachs, a couple others.
Soros donated at least 400,000 to 700,000 pounds to keep them inside.
But its those evil Russians doing the meddling lol! Im sure Bilderberg and Le Cercle will think of something.

Boy those Yanks really want to control EU. And they have always had their noses inside since the Marshal Plan, to Operation Gladio, to keeping thousands of troops occupying Germany to this day. The CIA is involved in just about all aspects.

One third of EU parliament gets money or aid from Soros. The EU just cant seem to manage to seperate. Too afraid.

Lets remember that the EU has so many trillions of Debt. They need to keep buddies with the banksters. Gotta keep importing third worlders for cheap labour too.

I rather lose a trillion EU dollars, then let Neocon-Neoliberal-bankers elites destroy Europe
via their wars, mass immigration, New Left / Freemason idealogy, while they getting richer richer in the name of Globalization.

The big question is: we can the European Central Bank do if Europe remains unbalanced? I think this is the main question, the one that should make us wander. Part of the crisis was originated on the weakness of peripheral countries that contract enormous debts to fuel economic growth in e.g., Germany and then colapse at first sign of instability in the banking system or the stock exchange markets. Honestly, Europe needs to be robust and the first step towards this is to create the Eurobonds. In an integrated market, we have to forget the idea of having individual debts to countries outside Europe.

I’m not sure if it could cope with another yet predating crisis. What we know is that Europe is able to cope without shame political prisoners and pseudo dictatorships encouragement within its borders, aka Catalonia

The point of sharing the same currency among many countries is to smooth trade. But allowing different interest rates in different countries in effect generates barriers to trade credit. I think the ECB should be reformed to ensure that all Euro countries adopt the same interest rates to the private sector. Differences in government debt should be reflected in different contributions to a stability fund, not in the spread.

What right had the so called Eu, to force Ireland to bailout 42 percent of failed Eu banks including German and French banks, and threatened to destroy Ireland financial if we did not comply with your demands. What right had the, vile evil thing ,you call the Eu, to force my country into a 200billion euro bank debt, a bank debt we did not incur. Welcome to the E.U.S.S.R. TIME FOR IREXIT